Oil Breaks Losing Streak as Markets Eye Iran, Gasoline Supplies
Oil prices rose after four straight losing sessions as markets turned attention to Iran's nuclear activities and dwindling gasoline stocks in the United States, the top consumer.
Price falls that began on March 30 had gathered pace last week, when Iran released 15 British sailors and marines it had captured, wiping more than $4 off a barrel of U.S. crude.
U.S. crude settled up 38 cents to $61.89 a barrel, after tumbling $2.77, or 4.3%, on Monday. London Brent crude was also up, after a $1.65 loss in Monday trade, which was subdued by the Easter holiday.
Iranian President Mahmoud Ahmadinejad said on Monday that his country had begun industrial-scale uranium enrichment, which the West fears could be used to make nuclear weapons.
Iran says it wants the fuel for generating electricity, so it can export more of its oil and gas.
"After the release of the sailors, we're now back to the ongoing issue of the nuclear file," said Frederic Lasserre, head of commodities research at Societe Generale. "The market is much more skewed to the upside on political fronts."
Traders were also closely watching gasoline supplies in the United States prior to the peak summer driving season. Stocks of the motor fuel have dropped nearly 10% since early
February amid refinery outages.
On Tuesday afternoon, BP announced a brief shutdown at its Texas City refinery caused by a power outage.
A Reuters poll of analysts forecast U.S. government data due on Wednesday would show gasoline stocks fell 1.4 million barrels last week, alongside a build in crude stocks of 1.6 million barrels.
Brent crude has reached a record premium to U.S. crude of around $6 a barrel. That reflects relatively high stockpiles at the key United States storage hub at Cushing, Oklahoma, as pipeline constraints and refinery outages create a regional glut, analysts said.
The wide spread has also been exacerbated by curbed production from Nigeria due to militant attacks on the oil industry and the simmering tensions with Iran. Both oil producer nations are closer to the European market.
Barclays Capital technical analysts said U.S. crude had tested support at $61.35 in Monday's sell-off and could go still lower in the short term.
"Bigger picture, price action remains in a bull trend, with higher highs likely later in the month," they wrote in a note.
Adding support to prices, China imported 8.9% more crude in March than a year earlier to reach a near record, official data showed on Tuesday, as refiners geared up for a spring demand boost from farmers and construction work.